Fuel Cost Adjustment

Imagine if you had to project the amount of gas you plan to use in your car and how much it would cost every three months. You would probably estimate how many miles you normally drive, how much you think a gallon of gas will be and whether you are planning any extra car trips for your calculation.

PNM does the same thing with its fuel and purchased power costs. Just like the gasoline you use to power your car, the fuel PNM uses to power your life - whether it is natural gas, coal or nuclear fuel - is the largest component of electricity production. And just like when you fill up your car, the price of the fuels needed to create electricity fluctuates. The cost of fuel for power plants that use traditional fuels such as natural gas, coal and nuclear, can vary greatly. In comparison, most of the renewable energy generation sources we use to serve customers, such as solar and wind, obviously do not require fuel to create power. However, they are not available at all times of the day or night, so PNM uses a blend of traditional and renewable energy sources to meet our customers' energy needs 24/7.

The New Mexico Public Regulation Commission (NMPRC) approves our recovery of these fuel costs through the Fuel Cost Adjustment charge on your bill. Just like when you set a budget for your gasoline use throughout the year, our fuel cost projections may be higher or lower each month based on the actual costs at that time. Because you pay only the actual costs of fuel, PNM reports these costs to the NMPRC and regularly adjusts this pass-through charge based on the changes in our fuel costs over time.

Under previous rates, PNM recovered part of our fuel costs through the monthly energy charge on your bill, and the remaining amount was billed separately as the Fuel Cost Adjustment charge. In October 2016, our rates changed and 100 percent of the fuel cost for traditional resources is included in the Fuel Cost Adjustment section of the bill. Fuel charges are now listed in two lines under the Fuel Cost Adjustment on the bill as shown below. All of the costs PNM incurs to meet its renewable resources requirements are included in the separate Renewable Energy Rider. It's important to note that the costs in this section are not related to net-metered usage for participants in our Customer Solar Energy Program.

The fuel charges are listed in two lines under the Fuel Cost Adjustment on the bill as shown below: